City Council Approves Energy Services Agreement with Ameresco

Communications Director

City Council Approves Energy Services Agreement with Ameresco

Posted: 12/30/2009

City Council approved an ambitious energy services agreement with Ameresco Tuesday night providing for improvements that will save the City of Knoxville millions of dollars while reducing its energy consumption and carbon emissions.

The savings generated by the $19 million energy conservation package will pay for the costs of installing and maintaining the improvements in less than 15 years. Ameresco, a Massachusetts-based energy services company with offices in Knoxville, has been working with the city for more than a year to develop the plans.

Through this project, the city will upgrade 99 city-owned buildings, as well as 37 ballparks/athletic fields and 3 public golf courses in and around Knoxville. The project is designed to save money in energy and maintenance costs, and will take advantage of special funding options available for this type of energy-infrastructure investment. Under an Energy Savings Performance Contract, the energy savings realized by the city will fully pay for the much needed capital improvements.

A Performance Contract is an alternative way to fund major capital projects without impacting the city's operating budget. It generates savings through reductions in utility costs by bundling together several energy conservation measures that help pay for each other despite the varying paybacks of the individual energy conservation measures. The costs to implement the project will be fully funded from the guaranteed energy savings provided by Ameresco, along with projected material savings. This means the project will pay for itself through the savings achieved.

"We're very pleased about this agreement that's going to make city government more energy efficient in terms of both costs and consumption," said Mayor Bill Haslam. "That's been an important goal of the city and we're excited to be at the point of turning these plans into a reality."

"We're very pleased to be working with Ameresco. This is going to make a great difference in our city," he added.

Ameresco will implement more than 17 different energy conservation measures which range from simple traditional conservation efforts such as energy efficient lighting, water conservation and weatherization to more capital intensive improvements such as upgrades to building comfort control systems, boiler replacements and HVAC improvements. Renewable measures, like solar hot water heating systems and a photovoltaic energy generation system, are included for several buildings. Among the cost savings the City will realize include equipment standardization and a reduction in maintenance costs.

The City of Knoxville currently spends slightly over $4 million a year on utilities. The planned investments in energy efficiency and renewable energy will save over $1.1 million in the first year after the installation process and the savings should increase in subsequent years. "In addition to the cost savings the city will realize we will also avert the release of approximately 18.5 million pounds of CO2 emissions annually, which is equivalent to taking more than 1,600 cars off Knoxville's streets," Haslam said. "So in addition to the financial benefits there are also significant environmental benefits for all of our residents."

Ameresco entered into a contract with the City of Knoxville in 2008 to conduct an investment grade energy/water audit of all city-owned facilities. It was the first step in a two-part process. The second step involved using it to develop energy-reducing capital improvements in a manner where the resulting savings would actually pay for those improvements.

"Ameresco is proud to partner with the City of Knoxville on a project that directly affects its citizens, our local employees and the environment," said John Bosch, Ameresco Vice President. "Mayor Haslam and the entire City Council have shown great foresight and aggressive leadership by utilizing a creative way to improve the City's infrastructure while reducing operating costs and helping to improve the environment. We look forward to making this project a reality for the City."

Final project engineering and construction is planned to get underway immediately. It anticipated that the process will take about two years to complete.

Total costs of the energy services agreement over 13 years will be $19,082,060. The City will also pay $86,694 for necessary measurement, verification and maintenance costs annually.

The city's guaranteed energy savings will range from $1.14 million in the first year to $1.84 million in thirteenth year, averaging around $1.5 million a year.

More information about the Energy Services Agreement between the City of Knoxville and Ameresco and the city's other energy and sustainability initiatives is available at www.knoxvilletn.gov/sustainability.